Senate File 140 - Introduced SENATE FILE BY BARTZ Passed Senate, Date Passed House, Date Vote: Ayes Nays Vote: Ayes Nays Approved A BILL FOR 1 An Act providing a sales tax exemption from the sale or 2 furnishing of metered water service and providing an effective 3 date. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 1782XS 83 6 ak/mg:sc/8 PAG LIN 1 1 Section 1. Section 15.331A, subsections 1 and 2, Code 1 2 2009, are amended to read as follows: 1 3 1. The eligible business shall be entitled to a refund of 1 4 the sales and use taxes paid under chapter 423 for gas, 1 5 electricity,water,or sewer utility services, goods, wares, 1 6 or merchandise, or on services rendered, furnished, or 1 7 performed to or for a contractor or subcontractor and used in 1 8 the fulfillment of a written contract relating to the 1 9 construction or equipping of a facility of the eligible 1 10 business. Taxes attributable to intangible property and 1 11 furniture and furnishings shall not be refunded. However, an 1 12 eligible business shall be entitled to a refund for taxes 1 13 attributable to racks, shelving, and conveyor equipment to be 1 14 used in a warehouse or distribution center subject to section 1 15 15.331C. 1 16 2. To receive the refund, a claim shall be filed by the 1 17 eligible business with the department of revenue as follows: 1 18 a. The contractor or subcontractor shall state under oath, 1 19 on forms provided by the department, the amount of the sales 1 20 of goods, wares, or merchandise or services rendered, 1 21 furnished, or performed includingwater,sewer, gas, and 1 22 electric utility services upon which sales or use tax has been 1 23 paid prior to the project completion, and shall file the forms 1 24 with the eligible business before final settlement is made. 1 25 b. The eligible business shall, not more than one year 1 26 after project completion, make application to the department 1 27 for any refund of the amount of the sales and use taxes paid 1 28 pursuant to chapter 423 upon any goods, wares, or merchandise, 1 29 or services rendered, furnished, or performed, including 1 30water,sewer, gas, and electric utility services. The 1 31 application shall be made in the manner and upon forms to be 1 32 provided by the department, and the department shall audit the 1 33 claim and, if approved, issue a warrant to the eligible 1 34 business in the amount of the sales or use tax which has been 1 35 paid to the state of Iowa under a contract. A claim filed by 2 1 the eligible business in accordance with this section shall 2 2 not be denied by reason of a limitation provision set forth in 2 3 chapter 421 or 423. 2 4 Sec. 2. Section 15.331C, Code 2009, is amended to read as 2 5 follows: 2 6 15.331C CORPORATE TAX CREDIT FOR CERTAIN SALES TAXES PAID 2 7 BY THIRD=PARTY DEVELOPER. 2 8 1. An eligible business may claim a corporate tax credit 2 9 in an amount equal to the sales and use taxes paid by a 2 10 third=party developer under chapter 423 for gas, electricity, 2 11water,or sewer utility services, goods, wares, or 2 12 merchandise, or on services rendered, furnished, or performed 2 13 to or for a contractor or subcontractor and used in the 2 14 fulfillment of a written contract relating to the construction 2 15 or equipping of a facility of the eligible business. Taxes 2 16 attributable to intangible property and furniture and 2 17 furnishings shall not be included, but taxes attributable to 2 18 racks, shelving, and conveyor equipment to be used in a 2 19 warehouse or distribution center shall be included. Any 2 20 credit in excess of the tax liability for the tax year may be 2 21 credited to the tax liability for the following seven years or 2 22 until depleted, whichever occurs earlier. An eligible 2 23 business may elect to receive a refund of all or a portion of 2 24 an unused tax credit. 2 25 2. A third=party developer shall state under oath, on 2 26 forms provided by the department of economic development, the 2 27 amount of taxes paid as described in subsection 1 and shall 2 28 submit such forms to the department. The taxes paid shall be 2 29 itemized to allow identification of the taxes attributable to 2 30 racks, shelving, and conveyor equipment to be used in a 2 31 warehouse or distribution center. After receiving the form 2 32 from the third=party developer, the department shall issue a 2 33 tax credit certificate to the eligible business equal to the 2 34 sales and use taxes paid by a third=party developer under 2 35 chapter 423 for gas, electricity,water,or sewer utility 3 1 services, goods, wares, or merchandise, or on services 3 2 rendered, furnished, or performed to or for a contractor or 3 3 subcontractor and used in the fulfillment of a written 3 4 contract relating to the construction or equipping of a 3 5 facility. The department shall also issue a tax credit 3 6 certificate to the eligible business equal to the taxes paid 3 7 and attributable to racks, shelving, and conveyor equipment to 3 8 be used in a warehouse or distribution center. The aggregate 3 9 combined total amount of tax refunds under section 15.331A for 3 10 taxes attributable to racks, shelving, and conveyor equipment 3 11 to be used in a warehouse or distribution center and of tax 3 12 credit certificates issued by the department for the taxes 3 13 paid and attributable to racks, shelving, and conveyor 3 14 equipment to be used in a warehouse or distribution center 3 15 shall not exceed five hundred thousand dollars in a fiscal 3 16 year. If an applicant for a tax credit certificate does not 3 17 receive a certificate for the taxes paid and attributable to 3 18 racks, shelving, and conveyor equipment to be used in a 3 19 warehouse or distribution center, the application shall be 3 20 considered in succeeding fiscal years. The eligible business 3 21 shall not claim a tax credit under this section unless a tax 3 22 credit certificate issued by the department of economic 3 23 development is attached to the taxpayer's tax return for the 3 24 tax year for which the tax credit is claimed. A tax credit 3 25 certificate shall contain the eligible business's name, 3 26 address, tax identification number, the amount of the tax 3 27 credit, and other information required by the department of 3 28 revenue. 3 29 Sec. 3. Section 15A.9, subsections 6 and 7, Code 2009, are 3 30 amended to read as follows: 3 31 6. SALES, SERVICES, AND USE TAX REFUND. Taxes paid 3 32 pursuant to chapter 423 on the sales price or rental price of 3 33 property purchased or rented by the primary business or a 3 34 supporting business for use by the primary business or a 3 35 supporting business within the zone or on gas, electricity, 4 1water,and sewer utility services prior to project completion 4 2 shall be refunded to the primary business or supporting 4 3 business if the item was purchased or the service was 4 4 performed or received prior to project completion. Claims 4 5 under this section shall be submitted on forms provided by the 4 6 department of revenue not later than six months after project 4 7 completion. The refund in this subsection shall not apply to 4 8 furniture or furnishings, or intangible property. 4 9 7. SALES, SERVICES, AND USE TAX REFUND == CONTRACTOR OR 4 10 SUBCONTRACTOR. 4 11 a. The primary business or a supporting business shall be 4 12 entitled to a refund of the sales and use taxes paid under 4 13 chapter 423 for gas, electricity,water,or sewer utility 4 14 services, goods, wares, or merchandise, or on services 4 15 rendered, furnished, or performed to or for a contractor or 4 16 subcontractor and used in the fulfillment of a written 4 17 contract relating to the construction or equipping of a 4 18 facility within the zone of the primary business or a 4 19 supporting business. Taxes attributable to intangible 4 20 property and furniture and furnishings shall not be refunded. 4 21 b. To receive the refund, a claim shall be filed by the 4 22 primary business or a supporting business with the department 4 23 of revenue as follows: 4 24 (1) The contractor or subcontractor shall state under 4 25 oath, on forms provided by the department, the amount of the 4 26 sales of goods, wares, or merchandise or services rendered, 4 27 furnished, or performed includingwater,sewer, gas, and 4 28 electric utility services for use in the zone upon which sales 4 29 or use tax has been paid prior to the project completion, and 4 30 shall file the forms with the primary business or supporting 4 31 business before final settlement is made. 4 32 (2) The primary business or a supporting business shall, 4 33 not more than six months after project completion, make 4 34 application to the department for any refund of the amount of 4 35 the sales and use taxes paid pursuant to chapter 423 upon any 5 1 goods, wares, or merchandise, or services rendered, furnished, 5 2 or performed, includingwater,sewer, gas, and electric 5 3 utility services. The application shall be made in the manner 5 4 and upon forms to be provided by the department, and the 5 5 department shall audit the claim and, if approved, issue a 5 6 warrant to the primary business or supporting business in the 5 7 amount of the sales or use tax which has been paid to the 5 8 state of Iowa under a contract. A claim filed by the primary 5 9 business or a supporting business in accordance with this 5 10 subsection shall not be denied by reason of a limitation 5 11 provision set forth in chapter 421, 422, or 423. 5 12 c. A contractor or subcontractor who willfully makes a 5 13 false report of tax paid under the provisions of this 5 14 subsection is guilty of a simple misdemeanor and in addition 5 15 is liable for the payment of the tax and any applicable 5 16 penalty and interest. 5 17 Sec. 4. Section 423.2, subsection 2, Code 2009, is amended 5 18 to read as follows: 5 19 2. A tax of six percent is imposed upon the sales price of 5 20 the sale or furnishing of gas, electricity,water,heat, pay 5 21 television service, and communication service, including the 5 22 sales price from such sales by any municipal corporation or 5 23 joint water utility furnishing gas, electricity,water,heat, 5 24 pay television service, and communication service to the 5 25 public in its proprietary capacity, except as otherwise 5 26 provided in this subchapter, when sold at retail in the state 5 27 to consumers or users. 5 28 Sec. 5. Section 423.3, subsection 32, paragraph a, Code 5 29 2009, is amended to read as follows: 5 30 a. The tax specifically imposed under section 423.2 on the 5 31 sales price from sales or furnishing of gas, electricity, 5 32water,heat, pay television service, or communication service 5 33 to the public by a municipal corporation in its proprietary 5 34 capacity. 5 35 Sec. 6. Section 423.3, Code 2009, is amended by adding the 6 1 following new subsection: 6 2 NEW SUBSECTION. 32A. The sales price from sales or 6 3 furnishing of metered water service to the public. 6 4 Sec. 7. Section 423.36, subsection 8, paragraph b, 6 5 subparagraph (1), Code 2009, is amended to read as follows: 6 6 (1) Taxes imposed on the sales, furnishing, or service of 6 7 gas, electricity,water,heat, pay television service, and 6 8 communication service. 6 9 Sec. 8. Section 423.40, subsection 2, Code 2009, is 6 10 amended to read as follows: 6 11 2. a. Any person who knowingly sells tangible personal 6 12 property, tickets or admissions to places of amusement and 6 13 athletic events, or gas,water,electricity, or communication 6 14 service at retail, or engages in the furnishing of services 6 15 enumerated in section 423.2, in this state without procuring a 6 16 permit to collect tax, as provided in section 423.36, or who 6 17 violates section 423.24 and the officers of any corporation 6 18 who so act are guilty of a serious misdemeanor. 6 19 b. A person who knowingly sells tangible personal 6 20 property, tickets or admissions to places of amusement and 6 21 athletic events, or gas,water,electricity, or communication 6 22 service at retail, or engages in the furnishing of services 6 23 enumerated in section 423.2, in this state after the person's 6 24 sales tax permit has been revoked and before it has been 6 25 restored as provided in section 423.36, subsection 5, and the 6 26 officers of any corporation who so act are guilty of an 6 27 aggravated misdemeanor. 6 28 Sec. 9. EFFECTIVE DATE. This Act takes effect January 1, 6 29 2010. Entities described in sections 15.331A, 15.331C, and 6 30 15A.9, subsection 7, that qualify for a sales tax refund due 6 31 to the sale or furnishing of water prior to January 1, 2010, 6 32 shall be entitled to recover the full refund due. 6 33 EXPLANATION 6 34 This bill provides a sales tax exemption for the sale or 6 35 furnishing of metered water service to the public. The 7 1 exemption discontinues refunds for sales tax paid for water 7 2 for corporations and businesses under Code chapters 15 and 15A 7 3 but allows the entities to recover the full sales tax refund 7 4 due after the bill becomes effective if sales tax was paid 7 5 prior to the bill's effective date. The bill eliminates the 7 6 need for a permit to collect tax for selling water and the 7 7 penalty for not having the permit. The bill takes effect 7 8 January 1, 2010. 7 9 LSB 1782XS 83 7 10 ak/mg:sc/8